One method of selling merchandise may be through online auctions. Consumers and retailers may sell merchandise over the Internet where winners may be determined by method of the auction, bid price, bid quantity and bid date. While many consumers may bid on goods at a web site, those bidders willing to purchase merchandise, but having unsuccessful bids, may not purchase any merchandise. It is believed that this causes a loss of potential revenue for sellers having additional inventory available for sale at a price at or below the consumer's reservation price.
It is believed that online dynamic pricing tools are increasingly being used to help move slow-moving or excess inventory faster and at a more attractive price than was possible before the advent of the Internet. Applicants believe that today's online auctions and buying groups, however, do not always create an optimal selling environment. In the perfect world of pricing theory, where buyers and sellers have an infinite amount of time to wait, where product value does not decay over time, and where there are no explicit inventory holding costs, Applicants believe that auctions may be the best inventory disposition option for the seller. In the real world of retail merchandising, however, Applicants believe that these perfect conditions crumble, demanding a more creative approach to selling than simple auctions.
Applicants believe that retailers currently have three principal options for dealing with excess inventory. First, they may accumulate bulk quantities to be sold to liquidators (often for pennies on the dollar) at the end of the product's life cycle. Second, they may advertise a product clearance sale to the general population. Third, they may accumulate bulk quantities and ship the merchandise back to the manufacturer for credit. It is believed that all of these methods reduce the value that retailers are able to capture from these sales. Bulk sales to liquidators, as with any transaction involving a middleman, may result in a transfer of economic value from retailers to liquidators. General price reductions through clearance-style sales may transfer too much economic value from retailers to consumers, as many consumers who may have bought merchandise at a price higher than the promotion sale price in the absence of a sale may instead divert to slow-moving inventory at a lower price point.
Applicants believe that to help solve the problem of lost revenue at auctions and reduce the cost of holding excess inventory, there are many different incentive and award programs to influence consumers to purchase on-line. For example, it is believed that one incentive program allows users to earn points, which are redeemable for products, by reading e-mail offers, shopping, completing surveys, accepting trial offers, referring other users, and reviewing web sites. It is believed that another incentive program allocates monetary amounts available for expenditure through credit instruments issued to program participants when the participants perform to a designated level of achievement. Applicants believe that these systems are generally offered by a single sponsor and are generally limited to offering consumers the ability to participate in incentive programs. It is also believed that the systems are typically not applicable for activity on auction sites.